In traditional finance, index funds have gained traction as an affordable and easy way to invest in a diversified group of assets. Now, as the world moves to the digital space, these vehicles that have a history of improving the investor experience have also become available for cryptocurrency assets.
Conceptually a cryptocurrency index fund makes sense, especially when considering the added complexities of digital asset purchases and storage. However, in practice, a lack of regulations limits their widespread adoption. When seeking out new investment opportunities, many institutional clients expect the same assurances standard in traditional offerings, including audits and third-party oversight in valuing fund assets, all of which are standard in traditional offerings.
Addressing regulatory concerns head-on is an investment platform known as Invictus Capital. Invictus operates in collaboration with a team of financial experts with deep crypto experience to create a bridge between traditional finance (TradFi) and decentralized finance (DeFi) — and has been doing so since 2017. The team now has a successful five-year track record as a pioneer and trusted player in the digital asset industry.
Most recently, Invictus has released the world’s first tokenized crypto index fund, Crypto20, an offering they designed to endure long after regulators begin clamping down on projects in the cryptocurrency space. In light of this, Haydn Hammond, CEO at Invictus, shares, “Missing regulation has always been a concern for any company in the crypto space, and previously obtaining this kind of regulated structure was not possible for any crypto asset manager. Invictus now offers a portfolio of institutional grade crypto investment products.”
As the first security token offering of its kind, Invictus relies on a blockchain-based distribution model and a series of close partnerships, including with MHA Macintyre Hudson as an auditor, the Catalyst Group for fund administration, Copper for matters concerning custody, Appleby for legal counsel and Coin Metrics for pricing.
Why regulation matters
Under the Crypto20 model, investors have legal ownership in the fund through tokenized participatory shares, replacing the unregulated tokens that existed under the previous model and granting holders greater and clearer rights. By design, the prior unregulated tokens did not equate to actual equity, and instead represented a contractual right to redeem against the fund, which could only be exercised under predefined circumstances.
As tokenized participatory shares, the fund is mandated to operate within the parameters of the fund offering documents and regularly report on the fund’s operation. For investors, this means that they will know at all times exactly which fund strategies are being pursued, if and how leverage is being utilized, and the type of crypto assets held in the fund. Investors also gain the benefits that come along with external auditors verifying fund assets and the overall health of the offering.
For institutions, regulations ensure additional peace of mind guaranteeing that they are investing among fully vetted investors, all of whom have already gone through extensive Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols.
As such, investors will have the same protections that are standard in a traditional mutual fund, such as the accurate price as determined by independent administrators and the firm operating with a fully independent board of directors. The funds also each have an International Security Identification Number (ISIN), a format institutional investors track and recognize in all markets across the globe.
The path for premium offerings
The company is set to expand their fund offerings over the coming months, including the much-anticipated launch of a DeFi fund focused on the burgeoning decentralized finance space and the rollout of the product suite to a new breed of institutional investors. The latter ambition will find support from a new Institutional Sales Office in Zurich, Switzerland, a major European financial hub. This office will primarily serve the needs of family offices, high net worth individuals, and other asset managers.
Invictus aims to become a premium digital asset manager trusted by global institutional and retail investors alike.
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